Overview: Are STRs allowed in McKinney, TX?

• Yes, short‑term rentals are allowed in McKinney. The city’s tax code defines short‑term rentals as a “hotel” for hotel occupancy tax (HOT) purposes and requires compliance with tax collection, reporting, and payment.
• McKinney has not codified STRs as a distinct zoning use; operations must comply with general zoning, building, fire, and nuisance standards. If a property is in the Historic District or subject to other overlays, additional approvals may apply, but those details are not in the provided sources.
• McKinney is tightening enforcement and expanding platform participation to collect and remit HOT, including on VRBO. Investors should plan to comply at the operator level and leverage platform collections where available.

Market Entry: How to start a short‑term rental business in McKinney

• Confirm zoning and land use constraints for the subject property with the Planning Department. While the city has not created a separate STR zoning category, ensure the intended use does not conflict with occupancy limits, HOA covenants, or deed restrictions.
• Structure the business and obtain any necessary business registrations and sales tax accounts through state and county channels (Texas Comptroller for sales/HOT), though only HOT is specifically cited in McKinney sources.
• Align insurance coverage with short‑term rental exposures (liability, property, and loss of use) and confirm any HOA or property management rules allowing STR operations.
• Establish listing, guest screening, and operating policies consistent with city nuisance laws and noise/occupancy rules.
• Implement tax compliance procedures: collect city HOT (7%), calculate the state HOT (6%) as applicable, and remit according to city/state rules.
• Where available, enroll in platform tax‑collection agreements (e.g., Airbnb in McKinney) and confirm reporting workflows; if using non‑enrolled platforms (e.g., VRBO as of the ordinance’s introduction), plan for direct operator collection and reporting.
• File monthly HOT reports with the City of McKinney Financial Services Department, or apply for quarterly reporting if below the threshold.

Documents, Permits, Licenses, and Guidelines

• City Hotel Occupancy Tax:
  • Report of Hotel Occupancy Tax form (McKinney Financial Services).
  • Compliance with Chapter 98, Article IV (Hotel Occupancy Tax).
• State Hotel Occupancy Tax:
  • File and remit directly to the Texas Comptroller; use state HOT forms and guidance.
• Administrative records:
  • Guest ledger/occupancy documentation, consideration amounts, and tax collection records.
  • Documentation to support any claimed exemptions (permanent resident, federal/state employees, diplomatic personnel, military on official business).
• Zoning and permits:
  • Standard building/fire permits as applicable to the property type; no STR‑specific license is cited in the provided sources.
• Platform agreements:
  • Enroll with platforms that remit McKinney HOT (e.g., Airbnb); document any authorization/collection arrangements.

Specific Regulations: City of McKinney

Hotel Occupancy Tax (HOT) is the primary active regulatory framework for STRs.

• Taxable base and rate:
  • The city levies a 7% HOT on room charges of $2 or more per day for stays of 30 days or less, excluding food and unrelated personal services. Room‑cleaning services may be excluded as specified by ordinance.
• Definitions:
  • “Short‑term rental” is defined as the rental of all or part of a residential property to a person who is not a permanent resident under state law.
  • “Short‑term rental platform” is a person or entity that provides a means through which a short‑term rental operator offers a dwelling unit for short‑term rental and from which the platform financially benefits.
• Collection and responsibility:
  • STR operators must collect and remit city HOT.
  • STR platforms must collect and remit the applicable HOT in lieu of the operator; if a platform fails or refuses, the operator remains responsible.
• Reporting:
  • Monthly HOT reports are due on the 20th day of the month following the reporting period. If the 20th falls on a weekend/holiday, the next business day applies. The U.S. Postal Service postmark date is considered the payment date, but the city must receive the report within five business days of the postmark or it will be considered delinquent.
  • Quarterly reporting option: If taxes owed are less than $500 in a calendar month or $1,500 in a calendar quarter, an operator may request quarterly filing (January–March, April–June, July–September, October–December), with payment due by the 20th day after the close of the quarter.
• Administrative reimbursement:
  • Operators may retain 1% of HOT collected as reimbursement for collection costs, subject to forfeiture for late payment, failure to file, or filing a false report.
• Penalties and enforcement:
  • 5% penalty on tax due if not paid when due; additional 5% if not paid within 30 days after the due date; minimum penalty $1.
  • Delinquent taxes accrue interest at 10% per annum starting 60 days from the due date.
  • Violations are a misdemeanor; every 24 hours of violation may constitute a separate offense.
  • Enforcement tools include forfeiture of the 1% reimbursement, suit to collect tax, and injunction against operating until compliance is achieved.
• Revenue use:
  • HOT revenue may be used only to promote tourism and the convention/hotel industry, as specified by state law (e.g., convention centers, visitor information centers, arts, and historic preservation/attraction programs).
• Ongoing policy work:
  • City staff are reviewing whether to require local contact information on listings and whether to require an annual registration or operating permit for STRs; no final actions are evidenced in the provided sources.

County (Collin County) and State (Texas) Context

• Collin County:
  • The provided sources do not include county‑level STR regulations or licensing for McKinney.
• State of Texas:
  • Texas Hotel Occupancy Tax is 6% on short‑term lodging stays of 30 days or less; operators must file and remit directly to the Texas Comptroller separately from city remittances.
  • Under Texas Tax Code Chapter 351, cities may impose and collect HOT up to 7%; state and local taxes are separate obligations.

Compliance Workflows and Best Practices

• Collect city HOT (7%) on all qualifying occupancies; remit monthly or quarterly per thresholds.
• Track and remit state HOT (6%) to the Texas Comptroller; maintain separate records.
• Use platform tax‑collection where available (e.g., Airbnb) to simplify city HOT compliance; if using platforms that don’t collect (e.g., VRBO as of the ordinance discussion), collect and report directly.
• Maintain complete records: guest payments, dates of occupancy, nightly rates, exemptions, and calculations.
• File on time to avoid penalties and preserve the 1% administrative reimbursement.
• Monitor city updates on potential STR registration/permit requirements and any platform enrollment expansions.

Contacts

• City of McKinney — Financial Services Department
  • Address: 401 E. Virginia St., McKinney, TX 75069
  • Phone: 972‑547‑2084
  • Fax: 972‑547‑2611
  • Email: see the city’s “Email Financial Services” link on the Hotel Occupancy Tax page
  • Office hours and department details: refer to the city’s Financial Services page
• Texas Comptroller (State Hotel Occupancy Tax)
  • Phone: 1‑800‑252‑1385
  • Website: see sources below

Source Links

• City of McKinney — Hotel Occupancy Tax page and report form:
  • www.mckinneytexas.org/1488/Hotel-Occupancy-Tax
  • www.mckinneytexas.org/DocumentCenter/View/6231
• City of McKinney — Hotel Occupancy Tax Ordinance (Municode):
  • www.municode.com/library/tx/mckinney/codes/code_of_ordinances?nodeId=SPAGEOR_CH98TA_ARTIVHOOCTA
• Proposed ordinance (2025) — STR operators and platforms to collect/remit HOT:
  • mckinney.legistar.com/View.ashx?M=F&ID=14730862&GUID=EB6F344F-1B45-4A6B-B456-A34D83E1275C&G=94356F23-B1FA-4626-9819-E01C53EABF7D
• Texas Comptroller — State Hotel Occupancy Tax guidance and forms:
  • comptroller.texas.gov/taxes/hotel/
  • comptroller.texas.gov/taxes/hotel/forms/
• City staff update on STR status (McKinney Courier‑Gazette):
  • starlocalmedia.com/mckinneycouriergazette/news/mckinney-addresses-short-term-rental-impacts-considerations/article_a386b45e-9c85-11ef-bbbe-d7534f00816e.html
• STR policy context and platform taxation (Citizen Portal AI article):
  • citizenportal.ai/articles/5707071/McKinney/Collin-County/Texas/McKinney-City-Council-Requires-Short-Term-Rental-Platforms-to-Collect-Taxes
• Industry commentary (STRisker):
  • writing.strisker.com/strisker-bulletin-mckinney-tx/